Budget deficit widens to Rs541.7b amid lax spending control.

Byline: Shahbaz Rana

ISLAMABAD -- The budget deficit in first quarter of the current fiscal year widened to Rs541.7 billion in the wake of loose control over debt and defence spending, suggesting things may get out of the control of Pakistan Tehreek-e-Insaf (PTI) government.

The Rs541.7-billion deficit was equal to 1.4% of the gross domestic product (GDP) despite a halt to development spending and securing Rs246.6 billion in provincial surpluses, reported the Ministry of Finance on Friday.

Current expenditures grew at a double-digit pace of around 20% but tax revenues grew just 7%, pointing towards problematic areas of the fiscal framework.

The federal government's fiscal indicators were more alarming as it booked a budget deficit of Rs733.3 billion or 2.5% of GDP, showed the summary of consolidated federal and provincial budgetary operations.

The overall 1.4% deficit was not in line with the revised annual target of 5.1% or Rs1.9 trillion. The budget deficit the difference between income and expenditure was about 23% higher than the same period of previous fiscal year despite the previous government's increased spending ahead of general elections.

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In the first quarter of last year, the gap was Rs433 billion or 1.2% of GDP. The federal government had closed last year at a record high deficit of Rs2.26 trillion or 6.6% of GDP.

The federal development spending stood at a mere Rs50.8 billion or 7.5% of the annual development budget of Rs675 billion. Compared with last year, the federal development spending was only half.

Finance Minister Asad Umar has promised that he would ensure that federal spending remains higher than last year.

Expenditures on defence and interest on loans shot up massively. Total debt servicing in the first quarter stood at Rs507 billion, higher by Rs90 billion or 20.2%, according to the summary. Defence spending amounted to Rs219.4 billion, up Rs37 billion or 20.3%.

The debt and defence spending consumed Rs726 billion or 67.7% of the total expenditure by the federal government.

Domestic debt servicing increased to Rs461.7 billion, a surge of Rs44.2 billion or one-tenth over the same quarter of previous year. Foreign debt servicing ate up Rs45.4 billion, higher by 63%, showed the summary.

The PTI government...